EUR/GBP drops to fresh 6-week lows, any recovery now seems capped at 0.85 mark

After yesterday's brief pause, the EUR/GBP cross came under some renewed selling pressure and remained capped below the 0.85 psychological mark. 

The latest UK CPI print, released on Tuesday, continues to point towards inflationary pressure in the economy. Adding to this, Wednesday's upbeat average weekly earnings growth data reinforced market expectations for a hawkish BoE twist and supported the British Pound's ongoing recovery move.

The sterling also benefitted from the British Chambers of Commerce (BCC) latest business survey that revealed a robust short-run outlook for both the services companies and manufacturers.

   •  BCC Survey: UK export sales grew at the quickest pace since late-2014

Against the backdrop of readjustment over ECB monetary policy expectations, market anxiety ahead of the upcoming French Presidential election continues to hinder any meaningful recovery for the shared currency and has been collaborating to the pair's recent downslide to six-week lows. 

On the economic data front, the release of final CPI print from Germany and France went unnoticed. Traders now look forward to BoE's Credit Conditions Survey, due in a short while from now, for some fresh impetus. 

Technical levels to watch

Immediate support is pegged near 0.8460 level, below which the cross is likely to accelerate the slide towards 0.8430-25 horizontal support ahead of the yearly lows support near the 0.8400 handle.

On the upside, the 0.8500 mark now seems to have emerged as immediate resistance, which if cleared decisively has the potential to lift the cross towards 0.8530-35 horizontal hurdle en-route 0.8565 strong resistance.